According to sources close to the company, Microsoft will unveil details of the new operating system at next week's TechXNY trade show in New York.
The announcement will likely come during a Tuesday morning keynote by Jeff Raikes, group vice president for productivity and business services at Microsoft.
Tablet PCs, in their most generic form, are modified notebooks: They will weigh under two kilograms, can connect to the Internet wirelessly, and may or may not include keyboards.
Unlike notebooks, though, tablet PCs will come loaded with new applications, such as Microsoft Journal, that let users input words or drawings into the computer by writing on the screen.
Microsoft "has really tried to make it like writing on a piece of paper," said one source, who requested anonymity. Microsoft, which will not build the machines, could not be reached for comment.
Other applications include Inking, which lets users add handwritten annotations to computerised documents, and voice recognition. Some of these applications have been demonstrated before in software prototypes.
Since the earlier days of the PC, researchers have tried to create a more natural way to input data into machines, with mixed results. The push to popularise handwriting and voice recognition has begun to accelerate in recent years because of improved software and increased processing power. The proliferation of computers into developing countries, where keyboards aren't a part of daily life, has also added impetus to the effort.
Many analysts have been skeptical of the tablet PC's prospects since it was first unveiled as a concept in November 2000. "Nontraditional" portables, such as Fujitsu's Stylistic pen tablets, have captured a fraction of the market and are typically used for very specific jobs, such as tracking inventories at a factory.
IBM dropped the TransNote, a ThinkPad that had let users input notes by writing on a paper pad with a special pen. Similarly, Sony released a Vaio desktop that allowed consumers use a PC screen as a painting canvas. The machine received rave reviews, but was pulled because of slow sales.
The software included in tablet PCs, although still in need of improvement, is more sophisticated and intuitive than some earlier versions, a source who has used it said. Microsoft has largely achieved its goals, set forth at the technology's introduction nearly two years ago, the source added.
In Journal, handwritten notes are automatically stored as image files. But the handwriting can be converted to a text file simply by circling it. Microsoft Journal looks like a legal pad with a view resembling lined paper.
One source who viewed the software said he liked Journal because it allows a tablet PC owner to use the entire device to take notes on or draw on. Meanwhile, the handwriting recognition worked well, but showed some lag time when translating handwriting to text, something that should improve before Tablet PC software ships, he said.
The editing process can become tedious, another source said, because it requires the user to edit text using a series of drop-down menus that display words or that ultimately allow the user to enter the correct word with a keyboard, the source said.
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